ADB warns of poverty risks in Asia

SHANGHAI, May 10 (UPI) -- Li Bao spends every day digging through piles of trash with her mother and younger brother, searching for scraps of metal to sell at the nearby salvage yard.

She's a member of China's growing migrant population, millions of whom have trekked from more impoverished regions in the country to the cities to look for work and the chance for a better life.

"We came to Shanghai, because people say that's where all the money is," the 13-year-old native of Anhui province said. "So far, we haven't been very lucky. It's a hard life, but we are hopeful."

Across town, where the Asian Development Bank was holding its 35th annual meeting in the city's Pudong financial district, trade ministers and bankers toasted champagne glasses at a glitzy reception Thursday night and applauded each other for overcoming the effects of the Asian Financial Crisis and the global recession that followed the Sept. 11 terrorist attacks in the United States.

Such are the contrasts in China's largest and wealthiest city, where smartly dressed businessmen share crowded streets with migrants and beggars under a skyline of neon lights and tall buildings.

Against this backdrop, the 60-member ADB board, including 43 Asian finance ministers, met to discuss ways to fulfill its mission of eradicating poverty while maintaining economic recovery amid a slowdown in huge export markets like the United States.

More than 3,000 ADB delegates, meeting in forums on sidelines of the conference, grappled with the task of developing the Asia-Pacific region, home to some of the world's poorest nations.

In China and many other countries throughout the region, tens of millions of working-class poor and migrant workers struggle to survive, many on less than $1 a day. Much of the region is mired in debt from non-performing loans, some dating back more than a decade.

China, conference host, contains the world's largest percentage of poor despite the impressive economic growth on display for delegates in the financial hub of Shanghai.

Officials from the Manila-based ADB warned that despite economic opportunities in the region, an increase in poverty among developing Asian nations would continue to prevent sustainable growth.

The ADB has predicted growth in developing Asia of about 4.8 percent this year and 5.8 percent in 2003, a significant drop from an average of 8.1 percent in the first half of the 1990s.

In opening remarks on Friday, ADB President Tadao Chino said China presented the region with tremendous opportunities, but that the widening gap between rich and poor was a concern.

"Many cities across China are growing rapidly," he told delegates. "So are the problems of urban poverty, pollution, traffic congestion, housing, and municipal finance."

Chino identified the need to "accelerate rural development, develop a social security system, restructure state-owned enterprises, and strengthen the financial sector while developing the private sector, as some of the major challenges facing China as it builds a market economy.

Chinese President Jiang Zemin, told delegates attending the opening ceremony on Friday that globalization had created jobs and opened economic opportunities but had also brought risks, and that the widening gap between the world's rich and poor was a threat to stability.

"The unfair and inequitable old international political and economic order has not been changed," Jiang said. "Economic development around the world remains highly uneven. Quite a number of developing countries, in particular, are experiencing severe difficulties."

China's growth as a world economic powerhouse was featured highly during the proceedings, as its 1.3 billion population promises a potentially huge export market for many Asian countries.

China also is one of the largest recipients of ADB assistance, absorbing about $1 billion of the ADB's $6 billion in annual disbursements, a huge portion of which has been spent in Shanghai.

Jiang said China would continue to open its markets to the world in the years to come, which could help offset the adverse effects of the global economic slowdown in other countries in the region.

"China's recent accession to the World Trade Organization marks the beginning of a new stage in the country's reform and opening up to the outside world," he said. "No matter how the world may evolve, China will forever be a good neighbor and a good partner to other Asian countries."

China's Finance Minister and ADB Board Chairman Xiang Huaicheng, echoing similar optimism and concerns in a speech to delegates, said China would offer big challenges and risks for Asia.

"Globalization presents massive opportunities, as well as great challenges," Xiang said. "As a new member of the WTO, China will be unswerving in its promotion of sustainable economic development based on further economic integration with the rest of the world."

Delegates are also considering a proposal, recently put forward by the Bush administration, to provide financial assistance in grants to impoverished Asian nations, instead of loans.

Brahm Prakash, director of ADB's Poverty Reduction and Social Development Division, said the agency would intensify its poverty reduction efforts by developing new assistance products such as grants, while reaching the poor more effectively through community-based organizations.

"The use of grant funds instead of only loans opens up opportunities for ADB to undertake mini pilot projects for poverty reduction in poorer countries," he told a news conference on Friday.

He said discussions also are underway to set up more theme-focused grant funds, including a new environment-poverty reduction fund and a gender-poverty reduction fund.

"These grant funds have greatly enhanced our ability to work with non-government organizations, civil society organizations, women's organizations, youth groups, and other sectors," he said.